Relationships

I’ve written before that the independent insurance agent’s traditional value proposition has always been choice of products and the relationship of the agent with the customer.  In the current market place we see consumers moving steadily to researching, then purchasing, insurance online or through direct, low cost, sellers.

What have many agents done in response?

Right.  Nothing at all. 

That is why the IA channel has lost 7% market share in a decade.

Now, nothing at all really isn’t fair because some agents actually have reacted to these market changes by trying to be the cheapest all the time.  You can recognize these agents because they quote everything through companies like EZLynx or other similar rating systems.  They are the agents who are obsessively concerned about representing the cheapest carriers.  They think their success, or lack of it, is because they have “the most competitive companies”.

Recently, one of our members was very upset because one of his agents had lost a “customer” because he hadn’t been able to respond with a cheaper price quickly enough when the customer called to complain about a renewal price increase.  The customer called at 9:00 a.m. and changed agents at 1:00 p.m. On the same day!

Did that agent have a relationship with the customer?  If you think they did I have some sand in the Sahara desert I want to sell you!

Hell no they didn’t have a relationship!  That customer was focused on price and speed.  Two things that agent couldn’t deliver on that morning.  There are lots of people like that.  There will be more all the time.

But there are also lots of people who still value choice and relationship.  See, our products are commodities.  Really, this isn’t new.  They’ve always been commodities.  All auto policies, for example, say pretty much the same thing.  So, the difference is, and always has been, price.

But agents are commodities.  They are people.  And they can be unique.

Now, if agents all do the same thing as other agents then they are commodities too.  But if agents take the time and the trouble and make the investment in a real relationship with someone then they can be something other than a commodity.  People in relationship with other people get more than 4 hours to fix problems.  They get second chances.  They get to keep relationships long term.  Heck, people will even pay MORE for products they can buy elsewhere when they get to buy them from people they are in a relationship with.

Independent Agents can’t win the speed or price battle.  Can’t win it now.  Won’t be able to in the future.  But we can absolutely have enough relationships that that doesn’t matter.